Methods of management of the enterprise risks

This article discusses the different methods of enterprise risk management including risk monitoring, risk transfer, risk acceptance and retention, and risk avoidance. It also highlights the benefits and drawbacks of each method. The article cites various sources to support the discussion.

Running head: RISK MANAGEMENT 1
Methods of management of the enterprise risks
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RISK MANAGEMENT 2
METHODS OF ENTERPRISE RISK MANAGEMENT
In a business setting, not everything occurs as planned. Some risks may arise during the
operations. Risk management is an integral part of enterprise planning. The first move is
identifying the risks that the organisations stand to face after which risk control methods are
designed. The method chosen should be in line with the business structure, and this gives rise to
different approaches to risk management.
Risk monitoring. This includes containing the risk to an acceptable level in the enterprise.
Garvey P.R in the Analytical Methods for Risk Management states that “one can Periodically
revisit the basic assumptions and premises of the risk”. This may involve a thorough scan of the
environment to see if there are changes that can affect the operations of the business. Fred
Schenkelberg states that “ If it is not possible to reduce the occurrence or severity, then
implementing controls is an option”. He further says that when the roots of future risks are fast
detected the risk can be dealt with in advance. Plans should be put in place to deal with the
reduction of common dangers.
Risk transfer. The risk is transferred to another party. Michael Herrera states that gives an
excellent example that numerous companies outsource certain operations such as customer
service and payroll services. This proves to be beneficial to the company as managing the risks
is not its core competence. The task of risk mitigation is given to another specialised party.
Garvey, P.R. in the Analytical Methods for Risk Management states that in as much as it provides
the organisation to entirely focus on the needs of the customers, transferring risk to another party
may bring about dependency as well as reduced control of the operations.

RISK MANAGEMENT 3
Risk acceptance and retention. In some cases, the value of the resources required to mitigate the
risks is higher than the amount of the risk. Fred Schenkelberg states that when the risks in the
organisation are at an acceptably low level than accept it. However, he warns that enough
research and monitoring should be done to gauge the tolerance level of the business to the risk so
that to avoid great damages once it occurs. Garvey in the Analytical Methods for Risk
Management states that one should provide the stakeholders with the facts of the risks as this will
help them to understand its nature.
Risk avoidance. It involves not doing an activity to avoid the risk that is included. The Owner's
Role in Project Risk Management chapter five states that the risks can be mitigated by changing
the parameters of the project. The project is reconfigured in a way that it becomes of less value
to the organisation. However this move is reported to have its share of demerits as some
unknown risks may arise in that process (Söderblom , Samuelsson & Mårtensson. (2015). pp8).
In David Gefenn’s business familiarity as risk mitigation in software development outsourcing
contracts, the article says that to avoid operational risks hypothesis tests are done to determine
the party that is only best in providing the service failure to which the operation is kept at bay.
In general, the risks should be minimised to prevent loss of property as well as maintaining good
health of the staff of the organisation.

RISK MANAGEMENT 4
References
Söderblom, A., Samuelsson, M., & Mårtensson, P. (2015). A longitudinal investigation of
business angel relationship risk mitigation strategies within investments: a three-
dimensional approach. Frontiers of Entrepreneurship Research, 35(1), 8.
Garvey, P.R. (2008). Analytical Methods for Risk Management: A Systems Engineering
Perspective, Chapman-Hall/CRC-Press, Taylor & Francis Group (UK), Boca Raton,
London, New York, ISBN: 1584886374.
Gefen, D., Wyss, S., & Lichtenstein, Y. (2008). Business familiarity as risk mitigation in
software development outsourcing contracts. MIS Quarterly, 531-551.
Article by Fred Schenkelberg: CRE preparation notes